- The Reserve Bank of Australia has hinted at a return to positive economic growth following two consecutive quarters of contracting GDP
- Guy Debelle, the RBA’s deputy governor, said in a Senate estimates hearing yesterday that “the September quarter for the country probably recorded positive growth”
- GDP fell 0.3 per cent in the March quarter of this year and by a record 7 per cent in the June quarter
- However, the extent of the recovery is still unclear, with Debelle going on to say that the “range of uncertainty around the numbers” remains significant
- Michele Bullock, the RBA’s assistant governor, also noted that banks could face further losses due to inevitable business failures and mortgage impairments
- The RBA’s formal forecasts will be revealed next Friday when it delivers its Statement on Monetary Policy.
The Reserve Bank of Australia suggested yesterday that the economy may have shifted back to positive growth, signalling the end of the first recession in 29 years.
Guy Debelle, the RBA’s deputy governor, told a Senate estimates hearing that “the September quarter for the country probably recorded positive growth rather than slightly negative.”
“The growth elsewhere in the country was more than the drag from Victoria and the drag from Victoria was possibly a little less than what we guessed back in August,” he added.
Recessions are defined by two consecutive quarters of negative economic growth, which Australia saw this year with a 0.3 per cent decline in GDP during the March quarter and a record seven per cent decline during the June quarter — the largest three-month slowdown since the end of World War Two.
Guy also noted that while some parts of the country were doing well — such as Western Australia’s mining industry — others, including tourism, education and entertainment, continue to struggle.
Despite the shift to a more optimistic economic outlook, however, the nation is by no means out of the storm.
“The range of uncertainty around the numbers at the moment is as large as it has been in my career,” Guy continued.
“We are having a lot of trouble trying to understand where we are let alone where we are going,” he concluded.
The RBA’s assistant governor, Michele Bullock, also weighed in with a speech on Tuesday night, suggesting that banks would face further losses due to inevitable business failures and mortgage impairments.
“Business failures are currently much lower than usual because of income support, loan repayment deferrals and temporary insolvency relief. But this can’t last and we expect to see failures rise,” she said.
The RBA’s formal forecasts will be revealed next Friday when it delivers its Statement on Monetary Policy.